CLEAN ENERGY ISN’T DRIVING POWER PRICE SPIKES

The report finds that U.S. residential electricity rates have generally kept pace with economy-wide inflation since 2010, and that states with high clean energy growth often see rates rise slower than inflation. Instead, the report identifies natural gas price volatility, wildfire mitigation and liability costs, aging coal plant investments, and rising transmission and distribution costs as the primary drivers of rate spikes. It further argues that the regulated utility business model incentivizes capital-heavy investments over more cost-effective operational solutions, which compounds these costs for consumers.

• Since 2010, average U.S. residential electricity rates have increased by nearly 40 percent, which is consistent with the 40 percent rise in the Consumer Price Index (CPI) over the same period. Furthermore, average electricity bills rose by only 24 percent since 2010, a rate lower than inflation, partly due to energy efficiency and distributed energy resources reducing consumption.
• Data does not support the claim that clean energy drives cost increases; states with significant wind and solar growth, such as Iowa, New Mexico, Kansas, and Oklahoma, have often seen residential rates rise slower than inflation. In Texas, wind and solar deployment reduced wholesale electricity costs by $31.5 billion between 2010 and 2022.
• Natural gas price volatility is a major driver of electricity costs, particularly in states heavily reliant on gas generation like those in New England, Florida, Pennsylvania, and Ohio. In North Carolina, natural gas volatility accounted for 46 to 67 percent of total residential bill increases since 2017.
• In California, wildfire-related costs—including grid investments, vegetation management, and insurance—account for 16 percent of the total cost to customers of the state's three primary investor-owned utilities. These costs have grown to $5.5 billion per year.
• Transmission and distribution (T&D) costs are rising nearly twice as fast as inflation, with capital investment by investor-owned utilities increasing 64 percent from 2016 to 2023 (from $53 billion to $87 billion). These costs rose from one-fifth of total electricity revenue requirements in 2010 to one-third in 2022.
• Utilities continue to invest in uneconomic coal plants, increasing the average remaining plant balance per unit of capacity from $560 per kW in 2010 to $745 per kW in 2020 (inflation-adjusted). In West Virginia, regulators have ordered coal plants to operate at a capacity factor of at least 69 percent despite declining economics.
• The regulated utility business model incentivizes capital spending over operational expenses because utilities earn a regulated rate of return on invested capital. A one percentage point rise in return on equity can increase a utility's capital investment by 2 to 4 percent.

APA

Pierpont, B. (2024). CLEAN ENERGY ISN’T DRIVING POWER PRICE SPIKES. Energy Innovation. https://energyinnovation.org/wp-content/uploads/Clean-Energy-Isnt-Driving-Power-Price-Spikes.pdf

Chicago

Pierpont, Brendan. CLEAN ENERGY ISN’T DRIVING POWER PRICE SPIKES. Energy Innovation, 2024. https://energyinnovation.org/wp-content/uploads/Clean-Energy-Isnt-Driving-Power-Price-Spikes.pdf.

Wikipedia

{{cite report |last1=Pierpont |first1=Brendan |title=CLEAN ENERGY ISN’T DRIVING POWER PRICE SPIKES |publisher=Energy Innovation |date=July 2024 |url=https://energyinnovation.org/wp-content/uploads/Clean-Energy-Isnt-Driving-Power-Price-Spikes.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{pierpont2024clean, author = {Pierpont, Brendan}, title = {{CLEAN ENERGY ISN’T DRIVING POWER PRICE SPIKES}}, institution = {Energy Innovation}, year = {2024}, month = jul, url = {https://energyinnovation.org/wp-content/uploads/Clean-Energy-Isnt-Driving-Power-Price-Spikes.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }